2 on the Fed: The Rate Hike & How the Banks Run the Fed

Listen to the past two Alternative Visions shows on the Federal Reserve Bank topic. June 16 on the recent Fed Interest Rate hike and June 23 on How the private banks really control the Fed, not the government. (Additional comments on Trump’s failed job promises and what’s really happened at Carrier Corp., Ford, and jobs).

Dr. Rasmus continues the review of the Federal Reserve Bank, showing how the private banks today control the Fed more than ever in recent decades. How the Fed’s structure permits private banking interests to dominate strategic decisions of the central bank, and how there control of the Fed is about to deepen further under Trump. Jack explains how the expansion of Debt before 2008 was the source of the crisis, and how $50 trillion more debt has been added globally since 2009. Debt is the appearance of the crisis. Excess credit has enabled it but excess liquidity provided for decades by the Fed and other central banks is the source of the excess credit and debt. How the Fed and other central banks contributed to the last financial crisis and have been creating the next. The explosion of central bank liquidity under Greenspan from 1986 to 2006 is detailed, leading to multiple financial bubbles and culminating in the 2008 financial crash. Jack previews the show with comments on ‘Donald the Trumpet’s claim he saved 1100 jobs at Carrier Corp, but facts show Carrier is sending 600 jobs to Mexico and automating away the rest in the US. How ‘The Trumpet’ claims of jobs in auto and mining also are false. (Next week: The Fed under Bernanke and Yellen).

JUNE 16 SHOW ANNOUNCEMENT:

Dr. Rasmus reviews the Federal Reserve’s interest rate hike decision this past week, showing how the Fed’s justifications for the rate hike based on ‘data’ are contradictory. How the data show no hike was justified. Rasmus explains how the Fed has been manipulating reporting the data on prices, unemployment and wages in order to justify 8 years of zero rate borrowing by the banks—i.e. 7 years after the banks were fully bailed out in 2010. More than $15 trillion in virtually free money was provided by the Fed to bankers and investors since 2009 as a result. Rasmus also addresses the Fed’s announcement this past week to begin selling off its $4.5 trillion balance sheet, but explains that will be token and temporary. Rasmus predicts the Fed’s recent string of 3 rate hikes has reached its limit now that the US economy is weakening once again. The second half of the show returns to the theme of ‘Central Banks at the End of Their Ropes’ and the origins of the Fed as a creation of the private banks, a corporation funded by and run by the private banks. (Next week: The Fed under Greenspan and Bernanke).

A good question. Why 2% and not another number. I think it may be because economic theory assumed that a 2% inflation rate for goods and services corresponded to what they call the ‘natural rate of unemployment’ of about 4.5%. Not to get too theoretical, it is based on what economists called the Phillips Curve, an historical measure of the mid-20th century trade off between levels of inflation and rates of unemployment. At 4.5% unemployment rate (defined per the U-3 rate which is nonsense anyway), inflation was suppose to be stable at 2%. They called this the NAIRU–for non-accelerating inflation rate of unemployment. But this is all nonsense, since the Phillips Curve broke down in the 1970s and has only appeared periodically since. It doesn’t exist in the 21st century, as unemployment is 4.5% but inflation is really only around 1% to 1.5%. Price targets of 2% or whatever are for public consumption and justification for the central bank, the Fed, to keep pumping massive liquidity into the bankers that drives interest rates to near zero and gives them a decade of cheap and near free money with which to speculate and make their super profits. The 2% in other words is just a fiction. They’d raise or lower it, as necessary, to keep the real game going–nearly free money for the banks and investors. (Yes, they’re raising rates now a little, but it won’t go much farther. The rate hikes are for the Fed to get a cushion for the next recession, which is coming in 2018.

A very clear explanation of how credit drives debt and how the tens of trillions of dollars broadcast around the world by central banks makes economic collapse inevitable since those dollars were used for casino capitalism to use John Maynard Keynes’s wonderful metaphor. As an aside Dr. Rasmus has cleared up an economic puzzle that has bothered me for decades. As no one remembers, when Reagan was driving up budget deficits in the trillions of dollars the liberals/progressives were screaming that the economic world was about to collapse. I specifically remember a series of articles in the New York Review of Books by Prof. Geoffrey Barraclough who was confident that the economic world would explode because it was awash in debt. This obviously never occurred and the only explanation I’ve ever found is by Dr. Rasmus and his concept of the dual deficits of trade and budget deficits and how the one props up the other. It is particularly irksome that in these United States of Amnesia no one remembers the Reagan deficits much less explains why they did not cause economic collapse.

Dr. Rasmus on Twitter

Jack’s Weekly Radio Show, ALTERNATIVE VISIONS

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